Hello. Welcome to countdown. Im mark barton. Im anne aedwards. The euro has been hitting new lows. The reason, the threat of deflation in the eurozone amid speculation that the European CentralBank President path draghi will begin quantitative easing as early as this month. His attention will be focused on some very important data. Inflation figures. Those figures might edge the European Central bank closer to a program of large scale Government Bond purchases. It is expected to show the first annual decline in Consumer Prices in five years. With oil prices staying low, it could show a slump in growth. The e. C. B. Moving towards full blown quantitative easing. For more, lets go to hans nichols. He is live in berlin for us this morning. Could draghis case of quantitative easing be bolstered this morning by inflation or deflation numbers . Technically yes. What we expect to get from this headline number is 0. 1 . That would make his case easier that the e. C. B. Needs to step in and fulfill its mandate to bring inflation up to 2 . This is the last bit of data we had before that january 22nd meeting. Friday we have Consumer Confidence. What we may get on that reading is just an effect on how much richer consumers feel because of the plunging oil prices. Do we feel like we have more money to spend and shop . When you take a look at some of the other data out there, that is another one were looking for. Then we have elections and a big meeting. Were looking at whether or not draghis case is going to be bolstered. When you look at the declining oil prices, what that really means is we have a knock on stimulative effect and we should not be focus ond the headline number but on core inflation and that is expected to come in as 0. 7 when you strip out energy food crucially, it is alcohol, when you strip those things out of headline inflation you get a more accurate reading. The argument is because of Oil Prices Going down, well actually have more money to spend. In some ways were at the same impasse we have been at for several months. Guys . Well be having conversation about how much you should look through movement in the oil prices. What does draghi need to go ahead with sovereign bond purchases . Talk to me about how the voting works at the e. C. B. How much he needs german support in this . He has been very clear he doesnt need unanimity. Here is the issue. The question is not just when and if on quantitative easing but also the size. If draghi wants to get a big number, close to 1 trillion have, big monthly purchases, that is where this number starts to have some kind of influence. If draghi wants to continue to bolster his case, it needs to be a bazooka. If you want to have Something Like that, that is where the numbers, the effect of deflation really start to matter. That is why these numbers today are so important. Anna . Thank you very much. Hans nichols in berlin. Now the german chancellor Angela Merkel wont be in berlin when those figures are released. She will be in london in a meeting with David Cameron. Ryan chilcote is on downing street. What do we expect her to say to cameron about the topic of e. U. Immigration . Well, the members of the german dell great nation have delegation have led us to believe she will compromise on the position of freedom of movement. That is not up for negotiation but she will offer some qualified support for the idea of cracking down on migrant access to welfare. I say qualified because it will appear the germans are prepared to change some laws, maybe allow for some changes in domestic laws when it comes to welfare and access to welfare for migrants. It is not up for treaty change, particularly treaty change that would require ratification of all of the 28 e. U. Member states. Remember that the Prime Minister recently has indicated that he thinks that the kindor reform he would like to see would require treaty change. One member of the german delegation said we have laid out our red lines on the shouldve immigration long ago. They are well understood in britain. We look forward to britain doing that in this meeting. And perhaps that is how we should look at this. This is the beginning of a dance between germans, between European Union and the governments here in britain. The timing of course is important. It has been exactly 11 months since the german chancellor last visited 10 downing street and perhaps more importantly we are exactly four months from the general election if this country and the issue of the u. K. s participation in the European Union is a Core Campaign issue. She has not been the labor party lead as miliband. Why is that . First off, the the germans say she is here as the chairwoman of the g7. Germany will hold the g7 summit in the Bavarian Alps in june. The nominal purpose of this meeting is to set up the agenda for that g7 meeting. She is not here to discuss germanys own politics, at least officially. So there would be no need for a meeting with the opposition. The opposition said they only learned about the meeting until it was too late to ask for a meeting with the german chancellor. Just shows you exactly how much this issue of the European Union and britains role in the European Union is a Campaign Issue as the acrimony if you will between the opposition and government power in this country only increases in the runup to it. Thank you. Ryan chilcote at 10 downing street. Well be speaking with one of merkels closest political allies. Dont miss the interview with Michael Fuchs at 9 00 on the pulse. The Christmas Tree and the trimmings are long gone. Sainsburys is releasing Third Quarter sales figures after losing market share and market value last year. Can the supermarket regain Investor Confidence . Here with more is caroline hyde. Just looking at some of the retailers, its coast was down. Sanes brie sainsburys was down. A bad year. Their worst result since 1989. It is worth reminding ourselves this time last year sainsburys was the golden boy. How things have changed. We have started to see first half sales fall. They said second half would fall as well. The c. E. O. Justin king retired in july and seemed to hand over a poison chalette to his successor. It is not always going to be winning markets share. The evidence is clear. Were seeing 16. 5 market in terms of best share in the u. K. For groceries. That is down from 17 this time last year. So they lost that. Equally, were starting to see michael realizing this. He should know better than anyone what he was inheriting. He has been there the same amount of time as justin king. A decade. They stood side by side for much of the last few years. He warned the markets he anticipated years of negative sales growth. He anticipated doubling their market share some 15 pnth. It is not doing it. The structural change in the u. K. Grocery market as you suggest, caroline. What is sainsburys promising to do to tackle the competition . I know they have a joint venture. What is their general strategy slashing prices more. Sainsburys said well cut them 150 Million Pounds in the next year. Im sorry, 150 Million Pounds when another company is cut them by a billion pounds. Were going to slash the prices on 700 good. Now on 1,000. Asta is plowing 100 Million Pounds in one quarter. Double the amount sainsburys is spending in an entire year to cut their prices. They are looking at for the Investor Base cutting capital spending. They are going to be cutting costs. They may cut their dividend. This is a concern. They are having Concession Stores within sainsburys. More all about food. What is the rest of their offering like . Many feel this is not enough. What is the sales figure were watching for today . Down. 3. 2 . Clearly it is not going to be a good Third Quarter for sainsbury. Stores open more than a year will it hit their fullyear target . That is what were going to be assessing. We get tesco numbers tomorrow. They will be telling us what their plan is. Tesco wakes up the Sleeping Giant as many call it. It can only benefit all of us around this table. Caroline hyde, our business correspondent. Those figures are due at 11 00. Caroline will of course be breaking that. We will be crunching the numbers with john rogers of sainsbury. Tell us what youre following today. Tell us where you prefer to shop. Are you a discount person . A tesco person . A sainsbury person . Prices at the pump this morning. We talked about when the fall in oil prices is going to be really reflected at the pump. Part of that story is already happening. Were going to go through on the bloomberg website. R annaedwardsnews. Speculation about quantitative easing in the eurozone. What about the other big markets theme . The decline in crude oil prices in the u. S. . It has been trading at the lowest in more than five years in the u. S. It comes amid rising stockpiles in the u. S. On speculation that extra inventories will add to the global glut. Our next guest thinks greek people dont want to exit the eurozone sand predicting a lot of market noise and oonks prior to polling day. Time for company news. The worst performer is in the s p 500 offshore drilling contractor transocean. 1. 9 billion. Lowered to junk according to moodys which cites a slump in oil prices and market conditions. The interview, the comedy that may have prompted a cyberattack on Sony Pictures has generated more than 31 million in sales. It is a Record Online for the studio which temporarily pulled the film from theaters. Is search giant engine said advertisers will be able to tell whether clips delivered bits double Click Service are skipped or ignored allowing marketers to fine tune their campaign. Barclays head will retire. He washinged at the bank for more than 17 years. 70 of barbours warehouse staff started a month of continuous morning strikes triggering fears of missed deliveries. The good times are over. That is the verdict on 2015 from bill gross, the former manager over the Worlds Largest bond fund. When the year is done he wrote in his january Investment Outlook for more on what tariff holds for investors, were joined now by kevyn adams. Thanks for coming in. Lets talk a little bit about bill gross vement outlook and how that might tie in with your outlook. I think were optimistic about growth in the u. K. And u. S. And less in europe and japan. For capital markets, it is difficult to see Government Bonds doing particularly well given how well they did in 2014 and the low level of yields. It is not my experts. We have seen some expertise. Give us a sense, kevin, of why global bond yields are reaching new record lows whether it is yields in japan, the u. S. , europe global sovereign yields give us a sense of why we keep hitting new lows. There is multiple factors there. There is the deflationary coming from oil prices. We have seen that with a weakness in crude prices and well see this today with european inflation coming through probably negative on a yearonyear basis. The growth in the u. S. And the u. K. Is fine as i was describing a moment ago, but were also seeing a flight to quality and safety. Investors concerned about the impact of low oil prices and Slower Growth on equity markets. In the u. S. On the face of it, u. S. Yields are much higher than europe and jan and are pairing higher and Interest Rates will probably go up. Since were focusing on european inflation and the global view, investors global Consumer Prices, call it 1 for cash according to bank of america, the figures come down 1. 25 are we at the bottom of this deflation cycle or do we have further to go, quid pro quo, more bonds . I think we will see more disinflation come through in ther in term that is kind of as a matter of fact. Not just a u. K. Phenomenon on its own. We will see near term inflation coming down further. But that pretty much is priced into bond markets already. If we look at fiveyear german bond yields, negative now and have been for a few weeks. We look at the very low yields elsewhere. You say things might be exhausted. Is that the point . I think so. It is just so much is already priced in this terms of deflation and low growth. For us it is hard to see yields may fall a little further in the very near term deflecting those shortterm inflation. Core inflation is still 1. 5 . It is just the impact of oil prices. Again, that will correct itself in due course. You said earlier on you think Interest Rates in the u. S. Probably will go up this year. Many people still think that despite the fact that inflation is so weak. Do you think they will still have the courage or the the nerve to put Interest Rates up . I think in due course. Were not talking about the first half of this year. Were talking about the second half of this year. In due course, the u. S. Federal reserve will be prepared to look through the inflation, the shortterm inflation impact. They are seeing there is reasonable growth. Some of the federal governors are suggesting there may be some improvement in wages. Some of the early indicators were seeing, u. S. Wage growth suggests it is becoming more positive. From that point of view, once get through this period of deflation and move more into looking at decent growth yes, we think that the u. S. In particular will be raising rates. Why then are 30year treasuries having their best start to year ever, kevin . The yield on the 30th fall bin 25 basis points in three trading days. Why when the long end of the curve reflects on inflation, why are yields falling close to record lows . Because at the moment, the inflationary pressures are we think were getting close to the end of that cycle. There are the markets you dont buy fiveyear bonds at this level . 10year bonds . Fiveyear bonds perhaps in the u. S. Markets are not pricing it in correctly. There is this overall flight to quality. It is driving bond markets to pretty much unsustainable levels. Thank you. Stay with us. Well continue our conversation with him when we come back. 6 23 here in london. Given everything you said, kevin, in the remaining minutes, just give us a sense of how we should structure our bond portfolio for 2015. I think were generally cautious about assets as i was saying before. We favor bank loans. Decent where the liquidity might be challenged but getting yields. German Government Bonds negative. Is that fear or disinflation . It is a bit of both. It is the effect of likely q. E. And the impact it will have on german bond yields. Ken thanks a lot. Good to see you. Happy new year. Kevyn adams. Oil has been trading near 48 a barrel in the u. S. At a time when crude prices keep falling, who are the winners and the losers . Beal checking that scorecard next on countdown. Ah, got it. These wifi hotspots we get with our Xfinity Internet Service are all over the place. Hey you can stop looking. I found one. See . What do you think a wifi hotspot smells like . Im thinking roast beef. Want to get lunch . Get the fastest wifi hotspots and more coverage on the go than any other provider. Xfinity, the future of awesome. You are watching councel. Lets get straight to our Foreign Exchange check this morning. The euro dollar is trading at a level you havent seen since 2006. Falling for four straight days. It is a double edged story. Tonight you quiet get the Federal Reserve in terms of their thinking on the minutes. The fom everyone c minutes and you get draghis push for quantitative easing and the Consumer Price index expected to show the first decline in five years. Global reserves, people who hold the euro fell by 8 in the Third Quarter. More than the currency dropped against the dollar and indeed reserves of the euro are at the lowest level since 2002. Even a cheap euro cant bring them in to buy. That is the story of the euro. Coming off a fiveday retreat in the u. S. The yen is behaving itself as it were. That is the dollar index. Dollar yen at 119. 01. The dollar is at a 10year high. The yen will remain in the grip of risk aversion. Lovely line from ocbc but the dollar bullishness will stay in the very near term. These are the Bloomberg Top headlines. The euro has been trading at a nineyear low versus the dollar. On speculation draghi will begin quantitative easing as early as this month to combat the risk of deflation. Eurozone inflation data will be released at 10 00 london time. E. U. Immigration policies will be high on the agenda when the german chancellor merkel meets the Prime Minister in london later today. Merkel is said to be prepared to offer cameron a compromise on immigration. Germany would support welfare curves if freedom of Movement Rights are not called into question. Divers searches for diverse searching for debris a step closer to finding the black box and data recorders that will help determine what caused the crash. The bank of england has released minutes of meetings held by its directors at the height to have 2008 financial crisis. The documents reveal how officials found themselves stumbling through unchartered territory at a time there was no regime set up to deal with the failing banks and show concerns about a lack of experienced staff to deal with the crisis. Bank